14. Normally Regulation 11 requires that a new Member (i.e. Leeds NewCo) should start the following season in a lower League (here L2). Leeds NewCo wanted to avoid this ‘relegation’ and to ensure Leeds stayed in L1 it was prepared to pay a price to achieve this. The Football League was receptive to the idea and indicated that it might be prepared to exercise its discretion to permit this to happen.

19. On 2 August 2007 the Administrators informed the Club that there was no prospect of the CVA proceeding and that they intended to abort the CVA and resign their positions. Mr Taylor wrote to the Football League but did not mention the points deduction nor make any representations as to why it should be varied or waived. Mr Bates rang Lord Mawhinney. We accept Lord Mawhinney’s account that Mr Bates asked that if the 15 point deduction was imposed he could appeal against it. Lord Mawhinney suggested that he would be prepared to recommend that to the Board but the appeal should be to the member clubs because it was the member clubs that the Board was supposed to be representing. Mr Bates agreed to this suggestion and Lord Mawhinney agreed to put his proposal to the Board which he did on the following day.

20. On 3 August 2007 a Board meeting was held when the 15 point deduction was confirmed and an appeal to the League was agreed to. Later that day Mr Taylor wrote to the Football League objecting to the points deduction on the basis that it was outside the powers of the Board or was an improper exercise of its discretion. However Mr Bates by telephone informed the Football League that this letter had been sent without his authority and that it should be withdrawn. Mr Taylor wrote a second letter acknowledging the receipt of the proposed Agreement (which included Clause 4) asking that his earlier letter should be disregarded and confirming that:
"the conditions set out in your letter are acceptable to [the Claimants] save that the Company will appeal against the 15 point deduction ... with a view to the penalty being either withdrawn or reduced." He told us that he wrote the second letter because it did not accurately reflect what had been agreed.

32. As already described Leeds NewCo (and in particular Mr Bates and Mr Mark Taylor) were well aware that in order to secure this indulgence the Board was stipulating that in order to remain in L1 the Club would have to start the new season with a 15 point deficit. This had been agreed by Mr Bates on behalf of the consortium, as the price which had to be paid for the indulgence and they were prepared to pay it – subject only to an Appeal to the League.

36. We are satisfied that the Claimants case begins and ends with the Compromise Agreement which clearly embodied the intention of both parties. Taking the Agreement as a whole and in particular Clause 4 Leeds NewCo agreed to the imposition of the 15 points and to release the League from the claims which have now been advanced and to waive any rights to do so. Leeds NewCo specifically covenanted not to bring the claims it has now sought to assert and there is no basis to allow it not to honour that covenant.

The Tribunal dismisses the Claim on this ground alone.

39. Subsequently, on 4 February 2008, the League received from Mark Taylor, the solicitor acting for the First Claimant, what purported to be a letter before action in the High Court on behalf of the First Claimant in relation to the Condition. That letter did not meet the requirements of the CPR and the Football League directors rejected the letter on that ground.

41. On 20 February 2008, Bird & Bird wrote to Mark Taylor & Co., pointing out that the parties were subject to a valid pre-existing agreement to submit any disputes between them to arbitration and therefore asking them to agree to a stay of the proceedings in favour of a FA Rule K arbitration. No reply was received to that letter by the stated deadline and therefore Bird & Bird sent a chaser letter on the evening of 25 February 2008.

42. In response, NewCo’s solicitor accepted that the dispute was covered by FA Rule K, and, despite some delay, signed a Consent Order on behalf of the First Claimant, providing for the mandatory stay of the proceedings in favour of a FA Rule K arbitration. Mark Taylor agreed to conduct the arbitration on an expedited basis, because of the potential impact on 2007/08 final League standings. The full hearing on the merits was therefore provisionally scheduled for 16-18 April 2008.

43. However, no such agreement was forthcoming on behalf of Barnsley. Instead, it became apparent that Mark Taylor did not have authority to act on behalf of Barnsley. On 25 February 2008, the League received a letter by fax from Brabners Chaffe Street LLP, acting “on behalf of Barnsley Football Club Limited”. The letter states:
“... We understand that our client has telephoned your Lord Mawhinney to inform you that our client did not agree to lend its name to the above proceedings and that it had not approved the Particulars of Claim before they were filed at Court (or indeed since). We are investigating the position on behalf of our client but wish to set the record straight at this earliest opportunity ...”

44. On 25 February 2008, Bird & Bird sent a letter by fax asking Mark Taylor for his urgent comments on the suggestion in Brabners’ letter that the proceedings had been brought without Barnsley’s authority. No such comments were received. Over the following days, Bird & Bird sought (without success) clarification on the position of Barnsley from Mark Taylor.

45. On 7 March Bird & Bird called Mark Taylor to clarify, as a matter of urgency, whether or not he was authorised to act for Barnsley in relation to the proceedings.

46. On 11 March Bird & Bird received an email sent on behalf of Mark Taylor attaching a copy of the Notice of Discontinuance signed on behalf of Barnsley. On the same day Bird & Bird filed at Court the signed Consent Order and a copy of the Notice of Discontinuance.

47. Thus there was a delay of about 5 weeks primarily due to the misconceived High Court proceedings commenced by NewCo’s solicitors and their conduct of them.

48. On 4 March 2008, Bird & Bird sent Mark Taylor a letter by fax confirming that the League agreed to the First Claimant’s request that Arbitration be conducted in an expedited manner and set out some practical measures for achieving this. They included that (i) the First Claimant serve a Notice of Arbitration, as required pursuant to FA Rule K2(a)(i), in order to commence the Arbitration proceedings; and (ii) Leeds serve a Points of Claim in order to assist the tribunal to define and identify the true issues for the tribunal. The letter invited Mark Taylor to serve the Points of Claim by 10 March 2008.

49. On 7 March 2008, Bird & Bird received a letter from Mark Taylor sent by fax, in which he agreed to serve a Notice of Arbitration but stated that the Points of Claim would consist of the Particulars of Claim issued in the High Court.

50. On Saturday 8 March, Jonathan Taylor of Bird & Bird sent a letter by email to Mark Taylor requesting (among other things) that the Notice of Arbitration be served during the morning of 10 March 2008 at the latest and that a hearing of the tribunal be convened at short notice for the purpose of making directions on 11, 12 or 13 March 2008.

51. On 9 March 2008, Jonathan Taylor received an email from Mark Taylor confirming that the Notice of Arbitration would be served on 10 March 2008. In fact, the Notice of Arbitration was not served until 19 March 2008. Thereafter there may have been some dilatoriness on behalf of the Claimant but we do not regard it as critical or significant.

52. Leeds NewCo has neither tendered a credible explanation nor convincing excuse for their delay.

53. It is inescapable that if the appropriate Arbitration proceedings had been commenced in August or September or even October 2007 they would have been capable of resolution before the end of 2007. Given the date when these proceedings were started (19 March) and the first day of the Hearing before this Tribunal (16 April) it is obvious that our decision could have been given comfortably before the end of 2007.

54. With this history of events we are satisfied that there has been unreasonable and inexcusable delay on the part of Leeds NewCo. It is plain that Leeds NewCo was in the same position in August as it was in March when it finally got around to commencing these Arbitral Proceedings. It was imperative that the appropriate action was taken expeditiously. When the High Court proceedings were commenced they were in breach of the Arbitration Clause in the Regulations. Even before the arbitration proceedings were finally commenced, the Claimants were dilatory in initiating them.

55. There was no reason, if Leeds NewCo were genuinely concerned and disgruntled with the outcome of the League Members decision on 9 July, why they should not or could not commence Regulation K arbitration proceedings soon thereafter. This step could have been taken simultaneously with the Regulation K proceedings against the Football Association. They then held back and commenced the misconceived and abortive High Court proceedings. By delaying seven months before commencing these proceedings (August – March) they were in danger of prejudicing the other Clubs in League 1 who were also fighting for promotion.

58. We have no doubt that if this dispute had been promptly and properly brought, then the other clubs vying for promotion might have addressed their season in a different way. Until 19 March they will have proceeded on the legitimate assumption that there was to be no challenge and that the 15 points would not be restored. This late challenge brought uncertainty to the League near the end of the season at a time when other clubs had an understandable hope and expectation that they would enjoy automatic promotion, or the opportunity to compete for promotion through the play-off. In Stevenage Borough Football Club v The Football League Ltd CH [1996] 5 No 3043 Carnwath J was dealing with a similar case of delay and dismissed the proceedings. We see no reason to depart from his approach and apply it to the instant case.

We also dismiss the Claimant’s Claim on the ground of Leeds NewCo’s unreasonable and inexcusable delay in bringing the claim to this Arbitration.

62. We are satisfied that by virtue of Article 41, Article 4 and Article 6 the Board had all the requisite authority to exercise its powers and discretion to impose a Condition of a 15 point deduction. Moreover, the Insolvency Policy (in particular G5), properly construed, did not prevent the Board imposing the Condition. The assertion that the Board lacked the power to impose the Condition is unsustainable.

63. Mr Phillips also contended that the Board and the League in reaching their decisions acted unfairly and unreasonably. We have no hesitation in rejecting this argument. The Board came to the conclusion that the point’s deduction should be made a Condition of consent to the Cancellation of Withdrawal and Transfer as the most reasonable and proportionate way of protecting the legitimate needs underlying the Insolvency Policy. In doing so it rejected the other options open to the Board which included

(i) Simply expelling Leeds OldCo, so that Leeds United FC ceased to exist;
(ii) Allowing Leeds NewCo to join the Football League in L2, pursuant to regulation 11.